DIGEST: Whether a lawyer may undertake the representation of, or whether
a lawyer may retain, an adversary attorney, with or without the consent of
the clients being represented by the respective attorneys, depends upon an
analysis of the particular facts and circumstances, including: (a) the intensity
and duration of the relationship between the adversaries; (b) the intensity
and duration of the adversaries' relationships with their respective clients;
(c) the nature of the lawyer-lawyer representation; (d) the nature of the
work currently being performed by the lawyers for their respective clients;
(e) the relationship, if any, between the lawyer-lawyer representation and
the representation of either client; and (f) the relative importance of the
representations to the respective lawyers or firms.

CODE: DRs 5-101(A), 5-105, 5-105(C); ECs 2-8, 4-2, 5-1, 6-3, 7-8.

NOTE: Modifies N.Y. City 502 (1939); N.Y. City 307 (1934).

QUESTIONS

May a Lawyer, "L," undertake the representation of another lawyer, "C," as
a client, when C and L are representing adversary parties in an unrelated
litigation? Conversely, may C engage L as an attorney when C and L are representing
adversary parties in an unrelated litigation?

Frequently, lawyers seek out other lawyers to represent them, including
in the following situations:

Lawyers as People. Lawyers often require the assistance of counsel in their
personal affairs. Whether for convenience, or because of a lack of expertise
or confidence in the ability to handle the matter pro se, lawyers regularly
hire other lawyers to represent them in matters having nothing to do with
the area in which they practice or with the "business" of practicing
law. Thus, whether in the purchase or sale of a residence, in domestic relations
matters, in estate planning matters or for a variety of other reasons, lawyers
often hire other lawyers to provide them with professional services in their
individual, private capacities.

Lawyers in Their Business Dealings. Lawyers also routinely retain outside
counsel to represent them in their business affairs. The practice of law
has become a highly competitive business. A lawyer is as much in need of
the full range of legal services as any other business-person. Issues of
partnership taxation, real estate leasing, disputes with vendors and employment
litigation are just a few of the business-related matters on which a firm
may seek legal guidance. Similarly, outside counsel is often employed to
assist in intra-firm disputes, such as litigation arising out of the departure
of partners and associated financial and client solicitation issues. While
some large law firms may well be able to find this expertise in-house, they
also occasionally seek outside advice in complex financial or commercial
matters or when other circumstances warrant.

Lawyers in Need of Professional Guidance. Lawyers also hire other lawyers
when they confront professional quandaries such as client perjury or fraud
and other confidentiality concerns, conflicts of interest, and attorney-client
disputes. Whether in matters that may give rise to substantial financial
exposure or otherwise, the outside counsel they select may be another lawyer
in the field or a distinguished ethicist from whom a formal opinion is sought.

Lawyers in Trouble. Law firms ordinarily seek outside counsel in times of
crisis, such as when charged with malpractice by clients or misconduct by
regulatory agencies. Correspondingly, when a lawyer is charged with a disciplinary
violation, the lawyer or the firm may well retain an expert in such matters
either to appear as an advocate or to assist through counselling and guidance.
Indeed, because most lawyers do not handle such matters on a regular basis,
they are more inclined to retain outside counsel given that catastrophic
sums of money, their invaluable reputation, or their very right to practice
law may be at risk.

Overview of Ethical Principles

Various ethical principles are implicated by the retention of lawyers in
these factual contexts. For example, by virtue of the need to preserve the
confidentiality of information provided by a client to a lawyer, it is generally
impermissible to retain or consult with counsel in client-related matters
without the client's consent. n2 Additional complications may arise when
the hiring lawyer intends to divide the fee for the matter with the retained
counsel. These issues, though of great importance, are ordinarily resolved
without significant analytical difficulty. This opinion will focus, instead,
on a problem that may well give rise to analytical difficulties in certain
contexts and that may, unlike associating with an "expert" or dividing
a fee, often be perplexing.>FTNT>

n2 See EC 4-2 ("In the absence of consent of his client after full
disclosure, a lawyer should not associate another lawyer in the handling
of a matter; nor should he, in the absence of consent, seek counsel from
another lawyer if there is a reasonable possibility that the identity of
the client or his confidences or secrets would be revealed to such lawyer.");
EC 6-3 ("A lawyer offered employment in a matter in which he is not
and does not expect to become [competent] should either decline the employment
or, with the consent of his client, accept the employment and associate a
lawyer who is competent in the matter." (Emphasis supplied.)). Cf. Davis
v. York Int'l Corp., Civil Action No. HAR 92-3545, slip op., 1993 U.S.
Dist. LEXIS 7137 (D. Md. May 24, 1993) (lawyer lecturing in continuing
legal education course did not enter into attorney-client relationship with
client of student in course who asked a question regarding a pending matter).>ENDFN>

In resolving any ethical quandary, just as in addressing any other legal
problem, a critical step is identifying the issue. Authorities have differed
as to the nature of the perceived conflict of interest when a lawyer hires
an adversary to provide legal services, and generally choose one of two models.

The first model precludes lawyers from representing a client whose interests
conflict with or differ from those of another client of the lawyer. DRs 5-105(A)
and (B) provide that a lawyer may not accept or continue employment by a
client if the lawyer's "independent professional judgment in behalf
of [another] client will be or is likely to be adversely affected . . . or
if it would be likely to involve [the lawyer] in representing differing interests," which
are defined as including "every interest that will adversely affect
either the judgment or the loyalty of a lawyer to a client, whether it be
a conflicting, inconsistent, diverse, or other interest." See also EC
5-1. The rule permits the affected lawyer to proceed with the representation,
subject to certain limitations, if the consent of the affected clients is
obtained. This rule applies, however, only when one lawyer or firm has two
or more clients whose interests differ or conflict, that is, the rules prevent
a lawyer from taking action on behalf of one client that is contrary to the
interests of another client. That the matters are unrelated is immaterial.

The second model bars the representation of a client if the lawyer's independent
professional judgment on behalf of the client will be affected by the lawyer's
own personal or business interests. Under DR 5-101(A), a lawyer may not accept "employment
if the exercise of his independent professional judgment on behalf of his
client may be affected by his own financial, business, property or personal
interests." This rule is designed to protect a single attorney-client
relationship from being adversely affected by, broadly speaking, the personal
interests of the lawyer. For example, a lawyer may not, without properly
obtaining his or her client's consent after full disclosure, initiate a substantial
lawsuit on behalf of the client against a corporation in which the lawyer
had made what to him or her was a major personal investment. There, the presumed
risk would be that the lawyer would have an interest in repressing his or
her zealousness on behalf of the client to avoid jeopardizing a personal
investment.

For the reasons set forth below, we conclude that only the second model
is appropriately applied to the lawyer-adversary relationship.

Prior Ethics Committee Opinions

The ethical issues posed by a lawyer's retention of adversary counsel have
been addressed mainly in a handful of ethics committee opinions. n3 The discussion
below will focus on those opinions.>FTNT>

n3 See also Zuck v. Alabama, 588 F.2d 436, 439-40 (5th Cir. 1979), cert.
denied, 444 U.S. 833 (1979), the court held that a criminal defendant
had been denied the effective assistance of counsel because his defense attorneys
represented the prosecutor in an unrelated matter. Voicing the concern that "the
defense attorneys were subject to the encumbrance that the prosecutor might
take umbrage at a vigorous defense of Zuck and dispense with the services
of their firm," a conflict that "could conceivably have infected
the entire trial," the court ruled that the defendant's Sixth Amendment
rights had been violated. For comprehensive discussions of this subject,
see Steven C. Krane, When Lawyers Represent Their Adversaries: Conflicts
of Interest Arising Out of the Lawyer-Lawyer Relationship, 23 Hofstra
L. Rev. 791 (1995); Arthur Garwin, When Lawyers Need Lawyers, A.B.A.
J., Mar. 1994, at 97; Brian J. Redding, Potential Conflicts Resulting From
One Law Firm Representing Another, ALAS Loss Prevention J., Jan. 1996, at
5-10.>ENDFN>

In 1939, this Committee issued what seems to have been the first opinion
to confront the issue. N.Y. City 502 (1939) dealt with a situation in which,
during the conduct of a litigation, the inquiring lawyer had become acquainted
with the attorney representing the adversary. The adversary expressed interest
in hiring the inquirer to perform legal services on behalf of the adversary's
clients, including arguing motions and preparing briefs. The inquirer wanted
to accept this offer and to enter into the proposed arrangement, but while
continuing to represent his clients in the litigation. The Committee, citing
Canon 6 of the ABA Canons of Ethics, ruled that the inquirer could not accept
employment from his adversary even if all affected clients gave their consent.

N.Y. City 502 therefore purported to create a per se ban against lawyers
accepting employment from adversary counsel. In doing so, however, the Committee
failed to cite N.Y. City 307 (1934), a prior opinion in which it had reached
a conflicting conclusion. In Opinion 307, the inquiring lawyer had retained
counsel in Chicago to assist in the prosecution of certain claims of his
clients. Defense counsel in that case asked the inquirer whether he would
be willing to handle some unrelated matters in New York. The Committee, citing
no authority, held that the arrangement presented a consentable conflict.
See also Michigan Inf. CI-649 (1981) (lawyer could not accept a representation
of another client in a divorce action in which his lawyer-client represented
the adversary, even with client consent).

At the other extreme are opinions such as Iowa 92-28 (1993), which found
no impropriety whatsoever in the proposed representation of an adversary: "the
mere fact that lawyers involved have been adversaries in other, non-related
litigation should not affect their professional responsibilities or conduct.
It is the opinion of this committee that there is no impropriety in this
proposed representation." Accord Philadelphia 86-45 (committee viewed
the matter as one of client relations, not of ethics, and "suggested
to inquirer that he might wish to disclose the situation to his client (or
the client's legal representative) to avoid any potential embarrassment should
the matter be raised otherwise"); Maryland Inf. 82-4 (1981) ("the
fact that you represented a fellow member of the bar in a legal malpractice
action does not necessarily mean that your firm and your client-attorney
may not represent clients who have opposing interests in an unrelated matter").
n4>FTNT>

n4 See also California Rules of Professional Conduct, Rule 3-320 ("[a]
member [of the California State Bar] shall not represent a client in a matter
in which another party's lawyer is a . . . client of the member . . . unless
the member informs the client in writing of the relationship" (emphasis
supplied)).>ENDFN>

We have considered and reject the reasoning of N.Y. State 579 (1987), which
permitted representation of an adversary only when there was no conceivable
conflict, and then only with client consent. To its credit, the New York
State Committee rejected -- at least facially -- the per se approach of N.Y.
City 502 and concluded that a lawyer (Attorney A) could agree to represent
an adversary (Attorney B) in a personal and unrelated matter provided all
of the clients involved in the litigation gave their consent. It did so,
however, on the basis of a rule purely of the Committee's own construction:

It is the view of this Committee that the Code does not mandate a per se
disqualification. In the first instance, both Attorney A and Attorney B must
satisfy themselves that the creation of an attorney-client relationship between
them will not compromise in any way the representation of their existing
clients in the pending litigation in which they represent adverse parties.
If there is doubt in the mind of either attorney that the dual representation
by Attorney A might affect any settlement recommendation, litigation strategy
or other professional judgments either attorney might be called upon to make
on behalf of those existing clients, then Attorney A should decline the proffered
employment. If, on the other hand, both attorneys are confident that representation
of their existing clients will not be compromised in any manner by Attorney
A's acceptance of Attorney B as a client in an unrelated matter and if the
existing clients in the pending litigation both give their informed consent
to the dual representation following full disclosure, then Attorney A may
properly accept employment by Attorney B.

(Emphasis supplied.)

While the opinion cites both DR 5-101 and DR 5-105, it never states which
-- if either -- provision applies to Attorney A (or to Attorney B, for that
matter). In fact, the Committee applied neither 5-101 nor 5-105, and instead
devised the following test: whether the arrangement will "compromise
in any way the representation of their existing clients in the pending litigation
in which they represent adverse parties." N.Y. State 579 proceeds to
require client consent even if "both attorneys are confident that representation
of their existing clients will not be compromised in any manner . . . ." This
requirement is not justified by any provision of the Code. In reality, it
is contrary to DRs 5-101 and 5-105, the very provisions upon which it purports
to be predicated. DR 5-101(A), the provision that rightfully applies, requires
client consent only when a lawyer's professional judgment on behalf of a
client will be, or reasonably may be, affected by the lawyer's own interests.
If the standard of N.Y. State 579 is satisfied, that is, the representation
of both clients "will not be compromised in any manner," DR 5-101(A)
has not even been violated, and there is no conflict for any client to waive.

Similarly, if the representation of the clients in question "will not
be compromised in any manner" by the proposed retention of adversary
counsel, it cannot be the case that the independent professional judgment
of the lawyers "will be or is likely to be adversely affected," nor
would either lawyer be involved in representing an interest that "will
adversely affect either the judgment or the loyalty of [the] lawyer to a
client." Hence, if N.Y. State 579's synthetic standard is satisfied,
DR 5-105 has not been violated either, and again there is no conflict for
any client to waive.

It is therefore difficult to determine exactly what N.Y. State 579 means.
The Committee requires the lawyer to decline the proffered representation
of adversary counsel if there is any doubt in either attorney's mind that
the representation of their existing clients in the pending litigation in
which they represent adverse parties could be compromised in any way. The
opinion, in effect, creates a substantially lower threshold for disqualification
in cases of attorney-adversary representations by purporting to prohibit
such representations outright if either attorney has lingering "doubts." Because
indecision alone mandates disqualification without any provision for cure
through informed client consent, N.Y. State 579 purports to apply a per se
standard remarkably higher than that required by the New York Code of Professional
Responsibility. Thus, N.Y. State 579 not only created an ad hoc standard
for cases of lawyer-adversary retention, it purported to impose an enhanced
and unprecedented burden on lawyers: to obtain the consent of their clients
to a proposed representation even in the absence of a conflict of interest.
n5>FTNT>

n5 Nassau County (New York) Opinion 2/88 held that consent was required
in similar circumstances because of the "appearance of impropriety" language
in Canon 9 of the Code. N.Y. State 579, released several months earlier,
was not cited. It is generally recognized, however, that unless the proceedings
are likely to be tainted "'appearance of impropriety is simply too slender
a reed on which to rest a disqualification order.'" Lopez v. Precision
Papers, Inc., 99 A.D.2d 507, 470 N.Y.S.2d 678 (2d Dep't 1984) (quoting Board
of Educ. v. Nyquist, 590 F.2d 1241, 1247 (2d Cir. 1979)); see generally
1 G. Hazard & W. Hodes, The Law of Lawyering § 1.9:107 (2d ed. 1990).
Likewise, Nebraska Advisory Opinion 93-1, citing N.Y. State 579, held "that
an attorney may represent another attorney while opposing that attorney in
pending litigation only in limited circumstances," and that full disclosure
and consent from the client in the affected litigation was a prerequisite.
(Ultimately, the Nebraska Committee ruled that the inquiring lawyer, who
was serving as guardian ad litem for numerous children, was not in the position
of an attorney at all, but was deemed to be a parent under the law.)>ENDFN>

New Jersey similarly embraced a rigid approach and branded as unethical
per se a lawyer's representation in a personal injury matter of a client/attorney
who was also the lawyer's adversary in an unrelated contract case, notwithstanding
the fact that both clients in the contract case had consented after full
disclosure. New Jersey 678 (1994). Conceding that the representation would
not be improper under the conventional conflict of interest rules embodied
in Rules 1.7(a) and (b) of the Model Rules of Professional Conduct, the Committee
relied solely upon the New Jersey ethics rule barring representations "in
certain cases or situations creating an appearance of impropriety rather
than an actual conflict . . . ." n6 Specifically, the Committee felt
that the public might conclude "that the inquiring attorney or the client/attorney
may obtain unfair advantages and that the inquiring attorney may, in some
manner, suppress vigorous representation to preserve his relationship with
his client/attorney . . . ." Notably, within eight months the New Jersey
Committee had retreated from this position. In New Jersey 679 (1995), which
superseded its prior opinion, the Committee allowed that in appropriate circumstances
client consent could cure the conflict. Nevertheless, the Committee reiterated
its view that "the proposed representation of opposing counsel in another
matter raises a particularly sensitive circumstance, which an ordinary knowledgeable
citizen could easily conclude to be improper.">FTNT>

n6 New Jersey Rules of Professional Conduct, Rule 1.7(c)(2) ("in certain
cases or situations creating an appearance of impropriety rather than an
actual conflict, multiple representation is not permissible, that is, in
those situations in which an ordinary knowledgeable citizen acquainted with
the facts would conclude that the multiple representation poses substantial
risk of disservice to either the public interest or the interest of one of
the clients."). The "appearance of impropriety" standard,
which was contained in Canon 9 of the Model Code of Professional Responsibility,
was specifically rejected by the ABA in its Model Rules of Professional Conduct.
See Model Rules of Professional Conduct, Rule 1.9, Comment (disqualification
should be based on a "functional analysis," not the "very
general concept" of the "appearance of impropriety").>ENDFN>

Analysis of Governing Standards

The principal observation that can be made based on the foregoing review
of the authorities that have grappled with the conflict of interest issues
in the adversary-client context is that there is no agreement as to either
the identity of the proper standard or the manner in which it should be applied.
We believe that analysis of tangible fact, and not rigid formalism, is the
only sensible method for resolving these matters. Each situation must be
evaluated independently in light of its peculiar circumstances. Notwithstanding
the appearance of clarity and neatness, and thus the attractiveness, of bright-line
rules, their inherent inflexibility is unjustified in the absence of recurring
facts and palpable guideposts. A fortiori, when a determination must be made
based on an interrelated series of judgments and predictions, a bright-line
rule is ineffectual.

As noted above, we are of the view that the situation presented here must
be analyzed under DR 5-101, not DR 5-105. C is contemplating entering into
an attorney-client relationship with L, who is representing an adverse party
in an unrelated litigation C is handling for a client. Because C is not taking
on a new client, there can be no concern that his independent professional
judgment on behalf of a client will be adversely affected by his representation
of another client, as under DR 5-105. Thus, DR 5-101(A) would bar C from
continuing to represent his client (absent the client's informed consent)
only if the exercise of his independent professional judgment on behalf of
the client will be or reasonably may be affected by his own financial, business,
property or personal interests. C would have no reason to soft-pedal his
representation of his client, however, unless he reasonably believed that
L would be a less effective lawyer on his behalf if he were an aggressive
advocate. The risks are interrelated, and cannot be assessed without some
evaluation of the specific facts of each individual case.

At the same time, L cannot agree to represent C unless she, too, resolves
any conflict of interest problems she may have. L's financial or business
interests theoretically could impinge upon her independent professional judgment
on behalf of C if, for example, her interest in preserving the income stream
from C is of a sufficient magnitude that she is tempted to be less aggressive
in the course of her representation of her client in order to avoid offending
C. This risk may be significant, or it may not. The key assessment is whether
the materiality to L of the income stream from her representation of C so
substantially exceeds the importance of the L's relationship with her client
that the enticement will exist for L to violate her ethical duties to the
latter. This is not simply an accounting question, but is dependent upon
a variety of factors relating to the scope and duration of the attorney-client
relationships and the functions being performed by L for her respective clients.

Thus, it is the connection between the two lawyers that is viewed as the
potential contaminant in the pre-existing attorney-client relationships.
Several factors, suggested in whole or in part by the ethics committee opinions
discussed above, should be taken into account in judging whether the risk
of contamination is sufficiently great as to require the consent of the clients
to the proposed lawyer-lawyer representation: (a) the intensity and duration
of the relationship between the adversaries; (b) the intensity and duration
of the adversaries' relationships with their respective clients; (c) the
nature of the lawyer-lawyer representation; (d) the nature of the work currently
being performed by the lawyers for their respective clients; (e) the relationship,
if any, between the lawyer-lawyer representation and the representation of
either client; and (f) the relative importance of the representations to
the respective lawyers or firms.

None of these factors should be dispositive; they are not set forth in order
of relative importance. They are a means by which an objective viewer can
divine the tangibility of a sufficient risk to the representation of an existing
client to justify disclosing the lawyer-lawyer affiliation to the clients
and conditioning that affiliation upon securing client consent.

Thus, L may undertake the representation of C without having to consult
and obtain the consent of her preexisting client. It is important to bear
in mind that, under the applicable rules, even if L reasonably concluded
that she did have a business or professional interest that conflicted with
her duty to C, the only client that would have to consent would be C himself,
and not C's client. DR 5-101(A) only requires consent of the client whose
representation is likely to be adversely affected. The client presumptively
favored has no right, and no reason, to veto the lawyer-lawyer relationship.

From C's perspective, the situation is not substantially different. C is
perfectly capable of reaching the conclusion that the only client realistically
at risk of having a less-than-zealous representation is himself. Any thought
that C's aggressive prosecution of his client's claims against L's client
is likely to be dampened by her desire not to offend L and risk having a
substandard representation cannot and should not be presumed, particularly
if counterbalanced by a long-standing and important professional relationship
between C and his client. Thus, in the absence of objective facts indicating
that L is likely to represent C with less vigor if he is too contentious
in his dealings with L, C need not seek his client's consent to his retention
of L.

It would be impossible to attempt to address every conceivable combination
of factors and their implications under the conflict of interest rules. Viewed
objectively, there will be circumstances in which it is clear that there
is no conflict of interest for either lawyer, circumstances in which it is
clear that both lawyers have a conflict of interest (requiring consent of
both clients after full disclosure), and gradations in between. Consider
the following two hypothetical scenarios, which we offer as examples of the
extremes:

Scenario A. Lawyer A is a partner in a 500-attorney global law firm, working
in the firm's New York office. She is asked to undertake the representation
of Client X in a potential action against Y, a California-based company,
which failed to pay for a small shipment of goods. On behalf of Client X,
Lawyer A writes a demand letter to Y, and receives a response from Y's newly
retained attorney, who in turn is being represented in a personal real estate
transaction by Lawyer B, an associate in the Los Angeles office of Lawyer
A's firm. Lawyer A and Lawyer B have never met or spoken to one another.
The amount of the fee to be generated by the Los Angeles real estate matter
is immaterial to the firm. In these circumstances, it is inconceivable that
the independent professional judgment of Lawyer A on behalf of Client X will
be diminished by virtue of the fact that the attorney for X's adversary is
being represented in an unrelated transaction by her firm. There is, consequently,
no conflict of interest under DR 5-101(A) and no need for the firm to seek
Client X's consent to the continued representation.

Scenario B. Lawyer P, a solo practitioner, has been representing his life-long
friend and former partner, Lawyer Q, in a hotly contested divorce proceeding
for the past year. Although Lawyer P is charging Q a reduced rate for his
services, the fees P is receiving from Q constitute approximately 10% of
his income. P is asked to undertake an ongoing medical malpractice action
against a doctor who is being represented in the litigation by Q. The plaintiff
in the malpractice action, P's potential client, fired his prior attorney
because he refused to seek the imposition of sanctions against Lawyer Q.
Here, given the personal and financial relationship between P and Q, it is
difficult to see how P's independent professional judgment on behalf of the
malpractice plaintiff would not be adversely affected. Indeed, this may be
so severe a conflict that consent would not be effective. Although DR 5-101(A)
speaks only of obtaining consent after full disclosure, without any limitation
whatsoever, that provision, at least in New York, has been interpreted in
a manner that engrafts upon it the limitation on consentability contained
in DR 5-105(C), that is, it must be "obvious that [the lawyer] can adequately
represent the interests of each [client]." n7 Nonconsentability, however,
must be limited to the most extreme of conflicts, those in connection with
which an objective lawyer would urge the client to withhold consent.>FTNT>

n7 As the New York State Bar Association Committee on Professional Ethics
stated in its Opinion 635 (1992) (citing N.Y. State 595 (1988)):

While DR 5-101(A) provides that a client may consent to representation by
a lawyer whose financial, business, property or personal interests differ
from those of the client, thereby waiving the conflict of interest, consent
is ineffective if there is a reasonable probability (viewed objectively)
that the lawyer's interests will affect adversely the advice to be given
or the services to be rendered to the client.

>ENDFN>

In between these extremes, a lawyer seeking to undertake or continue representation
of an adversary attorney should give serious consideration to advising the
client of the relationship, even if the lawyer reasonably concludes that
consent is not required in the circumstances. Doing so would be consistent
not only with the precepts that selection of counsel should be made on an
informed basis, see EC 2-8, and that attorneys should provide clients with
sufficient information to permit them to make informed decisions regarding
the representation, see EC 7-8, but with the ethical objectives toward which
every member of the profession should strive.

CONCLUSION

Subject to the limitations and caveats expressed in the foregoing discussion,
the questions presented are answered in the affirmative.